Monday, May 16, 2022
KARACHI: The Pakistani rupee plummeted to an all-time low against the dollar on Monday, closing at Rs194.18 in the interbank market, down Rs1.65 from Friday’s 192.53.
With a fresh decline of 0.85%, the local currency surpassed the critical threshold of 194 for the first time in the history of Pakistan.
The Pakistani rupee has maintained its slump mainly because the US dollar is gaining strength against other major global currencies for the past few days.
However, the recent decline came on the back of the uncertain economic situation due to a delay in decision making and a stalled International Monetary Fund (IMF) programme.
Since the beginning of this fiscal year (July 1, 2021) to date, the rupee has collectively dropped by a massive 23.25% (or Rs36.64) compared to the previous fiscal year’s close at Rs157.54.
The rupee has maintained a downward trend for the last 13 months. It has lost 27.52% (or Rs41.91) to date, compared to the record high of Rs152.27 recorded in May 2021.
The market reacted negatively to the government’s decision to keep prices of petroleum products unchanged, Arif Habib Limited Head of Research Tahir Abbas said while speaking to Geo.tv.
“The decision taken by the government last night to maintain prices triggered the uncertain environment or the investors,” he said, explaining that the investors are now concerned regarding the revival of the IMF programme.
It is worth mentioning that Pakistan and IMF commission are scheduled to begin talks regarding the stalled programme on May 18 in Doha. The success of talks with the Fund was conditioned on the removal of subsidies provided by the Pakistani government on petroleum products.
The analyst further said panic selling is also seen due to a shortage of dollars and depleting foreign exchange reserves.
Despite Finance Minister Miftah Ismail’s assurance to stabilise the rupee-dollar parity and foreign exchange reserves, investors fear that if the IMF programme remains in jeopardy support from friendly countries will also remain a mystery.
Moreover, the political unrest owing to PTI’s protest campaign against the government is eclipsing the new economic team’s focus on economic firefighting which is also adding pressure on the dwindling rupee.
Former prime minister Imran Khan has announced to march with millions of his supporters towards Islamabad after May 20 to demand new elections to add to the troubles of the economically-challenged PML-N led regime.